Goldman Traders Record Most Losing Days in 7 Years in Q4
Last quarter, Goldman Sachs’s traders had the most losing days in about seven years, Bloomberg reports. The US banking giant lost money during 19 trading days – one of the worst performances in years. During one day, the company’s traders lost as much as $100 million.
The last time when Goldman recorded so many bad days was in 2011 when it showed negative results during 21 trading days. Considering the number of trading days in a given month, we can conclude that Goldman’s traders demonstrate a poor performance for an entire month in the last quarter. For comparison, the company saw only 12 days of losses during the first three quarters of 2018.
Fixed Income Trading Isn’t Lucrative
The company’s bond traders saw the worst revenue figures since the financial crisis in 2008. CEO David Solomon is currently conducting a review of the trading business and might decide to cut the fixed-income trading division, sources familiar with the matter told Bloomberg. The trim will involve job cuts and a reduction in funds allocated to the fixed-income unit. The bank might dedicate more capital to lending to customers in the trading group.
All in all, 2018 was not a bad year as a whole, with Goldman gaining over $100 million during 12 days in the course of the year.
In January 2019, CEO David Solomon commented on the bank’s annual results:
We are pleased with our performance for the year, achieving stronger top and bottom line results despite a challenging backdrop for our market-making businesses in the second half. For the year, we delivered double-digit revenue growth, the highest earnings per share in the firm’s history and the strongest return on equity since 2009.
We are confident that we are well positioned to support an even larger universe of clients, continue to diversify our revenue mix and deliver strong returns for our shareholders in the years ahead.
Goldman Recruits 100 Staff For Cash Management Business
On February 26, a person familiar with the matter told the Financial Times that the bank had hired 100 staff for its new cash management unit, which was announced in January of this year, and targeted 300 new jobs. Thus, Goldman is trying to compete with Citigroup and JPMorgan Chase.
The company promised to adopt innovative technologies to handle the “pain points” encountered by investment bank customers who deal with traditional service providers.
Goldman plans to add 200 more people in its offices in London, New York, and Bengaluru, India. Many of the already hired staff previously worked for fintech firms and held engineering positions.
The bank didn’t want to comment on the recent hires for its cash management business.
Cash management is used by companies to collect and manage inbound payments, carry out outbound payments, and handle the surplus cash. In 2017, the market size was $23 billion, with Citi, JPMorgan, and HSBC accounting for a share of about 5%.
Goldman Partners With Apple
At the end of the last week, Wall Street Journal reported that Goldman Sachs had teamed up with Apple to develop and launch a joint credit card later this year.
The card will integrate with the Apple Wallet app on the iPhones to allow users to enjoy exclusive features like set spending targets and manage purchase rewards. Besides, the credit card will come with a 2% cash back option when buying Apple devices.
The WSJ stated that Apple’s new deal with Goldman might anger the current banking partners. On the other side, Goldman is expected to spend about $200 million on the project.
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